UPDATE 1-EU strikes trade deal with Canada, looks to pact with U.S.

BRUSSELS Oct 18 (Reuters) - The European Union and Canada
agreed a multi-billion-dollar trade pact on Friday that will
integrate two of the world's largest economies and paves the way
for Europe to do an even bigger deal with the United States.

Canadian Prime Minister Stephen Harper and European
Commission President Jose Manuel Barroso resolved remaining
issues in Brussels, wrapping up talks launched in May 2009 but
stalled for months over quotas for Canadian beef and EU cheese.

"This agreement is a landmark achievement for the
transatlantic market," Barroso told a news conference, flanked
by Harper. "With political will and a good dose of hard work,
there is a way to reach a result that benefits people on both
sides of the Atlantic," he said.

The deal, the European Union's first with a member of the G8
club of the world's biggest economies, marks a breakthrough for
Brussels' free-trade agenda that so far has only achieved
smaller deals with South Korea and Singapore.

The accord is expected to increase bilateral trade in goods
and services by a fifth to 25.7 billion euros ($35 billion) a
year, according to the latest EU estimates.

"This is the biggest deal our country has ever made," Harper
said, adding that it was bigger than the North Atlantic
Free-Trade Agreement between Canada, the United States and
Mexico.

The European Commission is negotiating trade pacts with more
than 80 countries on behalf of the bloc's 28 members following
the collapse of the Doha global trade talks.

Delays to agreeing the Canada pact show how difficult such
deals can be.

European efforts to sign a free trade agreement with the
United States that would encompass half the world economy faced
a setback this month when a second round of negotiations was
cancelled because of the U.S. government shutdown.

The Canada agreement should provide a boost for EU trade
chief Karel De Gucht and could serve as a template for U.S.
talks because both deals seek to go far beyond tariff reduction
and to reduce transatlantic barriers to business. There are also
similar sticking points such as agriculture.